Are you thinking of buying a car? Are you worried about the price of your dream car? Put these worries to rest because you can avail a car loan and get yourself the car of your dreams.
With the rise in consumerist culture, most lenders have quickly adapted to provide specialised consumer finance, which includes car loans. Lenders give out car loans either to an individual or through companies which adjust the EMIs through the borrower’s salary, thus making it even easier to buy the car of your choice.
What are car loans?
1. Secured loan:
Car finance is secured, i.e. the car is hypothecated to the lender until they repay. In case the EMI for the car loan is not paid, the lender can seize the vehicle and sell it to recover dues. However, this is only in extreme cases.
2. The rate of interest:
Car loans can have either a fixed rate of interest or a floating rate of interest. The type of interest and the price depends on the lender and also the borrower's loan application. The rate of interest may be higher for borrowers who already have existing debt or for pre-owned cars.
3. Documents required:
A car loan requires fairly standard documents:
• Identity proof (PAN card/Aadhar card/Passport/Voter ID/Driving license)
• Address proof (Aadhar card/Passport/Voter ID/ Driving License/Telephone bill/Electricity bill/Gas bill/Life insurance policy)
• Income proof
o ITR for the previous 3 years,
o Form 16/Salary slips
o Balance Sheet/Profit and Loss account as applicable
• Bank statement for the last 6 months
•
4. Eligibility criteria:
Most lenders put up the car loan eligibility criteria on their websites for prospective customers to see. It is best to check out the eligibility criteria before applying for a car loan. Some of the standard criteria are:
• Minimum and maximum age of the applicant
• Minimum years of employment with the employer
• Minimum income including that of spouse or co-applicant
Some lenders may specify some other criteria, but by and large, these are the standard eligibility criteria.
5. Charges:
The interest on a car loan is not the only charge that a borrower will have to pay on the car loan. Some of the other costs are:
• Foreclosure charges
• Part-payment charges
• Overdue EMI charges
• Loan processing fees
• EMI payment mode swapping charges
• Cheque return charges
• Amortisation schedule charges
• Legal, repossession and incidental charges
While selecting the car loan, it is best to find out the lender who provides the loan with the lowest amount of charges.
6. Types of car loans:
Usually, there are three types of car finance available:
• Car loan for a new car
• Car loan for a pre-owned vehicle
• Loan against car
Each loan has different terms and conditions and interest rates.
With the rise in consumerist culture, most lenders have quickly adapted to provide specialised consumer finance, which includes car loans. Lenders give out car loans either to an individual or through companies which adjust the EMIs through the borrower’s salary, thus making it even easier to buy the car of your choice.
What are car loans?
1. Secured loan:
Car finance is secured, i.e. the car is hypothecated to the lender until they repay. In case the EMI for the car loan is not paid, the lender can seize the vehicle and sell it to recover dues. However, this is only in extreme cases.
2. The rate of interest:
Car loans can have either a fixed rate of interest or a floating rate of interest. The type of interest and the price depends on the lender and also the borrower's loan application. The rate of interest may be higher for borrowers who already have existing debt or for pre-owned cars.
3. Documents required:
A car loan requires fairly standard documents:
• Identity proof (PAN card/Aadhar card/Passport/Voter ID/Driving license)
• Address proof (Aadhar card/Passport/Voter ID/ Driving License/Telephone bill/Electricity bill/Gas bill/Life insurance policy)
• Income proof
o ITR for the previous 3 years,
o Form 16/Salary slips
o Balance Sheet/Profit and Loss account as applicable
• Bank statement for the last 6 months
•
4. Eligibility criteria:
Most lenders put up the car loan eligibility criteria on their websites for prospective customers to see. It is best to check out the eligibility criteria before applying for a car loan. Some of the standard criteria are:
• Minimum and maximum age of the applicant
• Minimum years of employment with the employer
• Minimum income including that of spouse or co-applicant
Some lenders may specify some other criteria, but by and large, these are the standard eligibility criteria.
5. Charges:
The interest on a car loan is not the only charge that a borrower will have to pay on the car loan. Some of the other costs are:
• Foreclosure charges
• Part-payment charges
• Overdue EMI charges
• Loan processing fees
• EMI payment mode swapping charges
• Cheque return charges
• Amortisation schedule charges
• Legal, repossession and incidental charges
While selecting the car loan, it is best to find out the lender who provides the loan with the lowest amount of charges.
6. Types of car loans:
Usually, there are three types of car finance available:
• Car loan for a new car
• Car loan for a pre-owned vehicle
• Loan against car
Each loan has different terms and conditions and interest rates.
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